[J-4A-D-2015] [M.O. - Eakin, J.] 

IN THE SUPREME COURT OF PENNSYLVANIA 

EASTERN DISTRICT 

CITY OF PHILADELPHIA, 

 Appellant 

 v. 

CITY OF PHILADELPHIA TAX REVIEW 

BOARD TO THE USE OF KEYSTONE 

HEALTH PLAN EAST, INC., 

 Appellee 

CITY OF PHILADELPHIA, 

 Appellant 

 v. 

CITY OF PHILADELPHIA TAX REVIEW 

BOARD TO THE USE OF KEYSTONE 

HEALTH PLAN EAST, INC., 

 Appellee 

CITY OF PHILADELPHIA, 

 Appellant 

 v. 

CITY OF PHILADELPHIA TAX REVIEW 

BOARD TO THE USE OF QCC 

INSURANCE COMPANY, 

 Appellee 

CITY OF PHILADELPHIA, 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

Nos. 19-22 EAP 2014 

Appeals from the Orders of the 

Commonwealth Court entered on 

11/18/13, at Nos. 97 and 98 C.D. 2013 

(reargument denied 1/7/14), affirming the 

order dated 12/27/12 of the Court of 

Common Pleas, Philadelphia County, Civil 

Division, at Nos. 3671, 3672, 3675, 3678, 

January term 2012 

ARGUED: March 10, 2015 
[J-4A-D-2015] [M.O. – Eakin, J.] - 2 

 Appellant 

 v. 

CITY OF PHILADELPHIA TAX REVIEW 

BOARD TO THE USE OF QCC 

INSURANCE COMPANY, 

 Appellee 

: 

: 

: 

: 

: 

: 

: 

: 

: 

CONCURRING AND DISSENTING OPINION 

MR. CHIEF JUSTICE SAYLOR DECIDED: December 21, 2015 

 

 I agree with the majority’s treatment of Taxpayers’ cross-appeal issue regarding 

the availability of refunds. I differ, however, with the decision to sustain the award of 

credits. 

 As to the matter of credits, initially, I agree with the majority that the 

Commonwealth Court erred in implementing a rule of construction favorable to 

Taxpayers. See Majority Opinion, slip op. at 16 n.4. In the refunds/credits arena, the 

approach of construing ambiguities in favor of the government is based, in part, upon 

the principle that recompense for overpayments of voluntarily paid taxes (that is, taxes 

not paid under coercion or duress beyond mere adherence to the requirements of the 

law) is a matter of legislative grace and not entitlement. See, e.g., Land Holding Corp. 

v. Bd. of Fin. & Revenue, 388 Pa. 61, 65, 130 A.2d 700, 703 (1957) (explaining that 

“[t]he right to sue the Commonwealth for the recovery of money or taxes alleged to have 
[J-4A-D-2015] [M.O. – Eakin, J.] - 3 

been erroneously paid to it exists only by the grace of the Legislature[,]” and, 

accordingly, refund statutes are to be strictly construed).1 

I differ, however, with the majority’s depiction, substantively, that credits are 

entirely distinct from refunds, see Majority Opinion, slip op. at 15-16, either generally or 

under relevant provisions of the Philadelphia Code. Indeed, the concept of the 

affordance of a refund by crediting an account due presently or in the future is so 

prevalent that this form of credit is often referenced as a “refund credit.” See, e.g., 

Royal Bank of Pa. v. Commonwealth, 705 A.2d 515, 517 (Pa. Cmwlth. 1998); Pa. 

Retailers’ Ass’ns v. PUC, 64 Pa. Cmwlth. 491, 502 n.12, 440 A.2d 1267, 1272 n.12 

(1982); cf. Caver v. Cent. Ala. Elec. Coop., No. CV 15-0129-WS-C, 2015 WL 5286501, 

at *5 n.8 (S.D. Ala. Sept. 8, 2015) (“[T]he common ordinary meaning of the term 

‘refunds’ embraces both cash and credit varieties.”). Accordingly, I find it likely that, 

when in imposing limitations on the availability of “refunds,” a government body also 

intends to restrict the availability of refund credits. At the very least, there is ambiguity 

in this regard which, as explained above, militates in favor of the taxing body. 

Even if this were not the case in general application, Section 19-1703 itself 

explicitly employs the refund-crediting concept. In this regard, Subsections 19-1703(5) 

and (8) each contemplate that, upon the granting of a refund by the Department or the 

Tax Review Board “the account of [the] petitioner may be credited with the amount of 

 

1 Accord Phila. Gas Works ex rel. City of Phila. v. Commonwealth, 741 A.2d 841, 846 

n.6 (Pa. Cmwlth. 1999) (refusing to apply strict construction against the government 

because “the dispute in this matter concerns the time limitation for seeking a refund or a 

credit of the prepaid taxes, not the rate or imposition of the . . . tax” (emphasis added)); 

see also Lacey Nursing Ctr., Inc. v. Dep't of Revenue, 905 P.2d 338, 344 (Wash. 1995) 

(“It is a general principle that tax statutes conferring credits, refunds or deductions are 

construed narrowly.”). See generally 85 C.J.S. TAXATION §2208 (2015) (“A refund of 

taxes is solely a matter of legislative grace, and any person seeking such relief must 

bring himself or herself clearly within the terms of the statute authorizing the same.”). 
[J-4A-D-2015] [M.O. – Eakin, J.] - 4 

such refund,” in lieu of the tender of a monetary payment. PHILA. CODE §19-1703(5), 

(8). These provisions plainly allow a form of a credit, which is made available through 

the refund process and, accordingly, is explicitly subject to the limitations attending the 

availability of refunds.2 For this reason, I find the reliance by the majority and the 

intermediate court on the absence of the word “credit” from Section 19-1703(1)(d) to be 

unpersuasive. See Majority Opinion, slip op. at 16 (quoting City of Phila. v. City of 

Phila. Tax Rev. Bd., Nos. 97-98 C.D. 2013, slip op., 2013 WL 6095552, at *6 n.6 (Pa. 

Cmwlth. Nov. 18, 2013).3 Again, City Council affirmatively provided for credits in 

Section 19-1703, but solely as a means to effectuate the refunds already subject to the 

express three-year repose.4

 

2

 Along these lines, Taxpayers acknowledge in their briefs that the permissive offsetting 

of an amount to be refunded against any taxes presently due from the taxpayer “is the 

absolute essence of a credit and clearly distinguishable from the former option of a 

refund.” Brief for Appellees at 25. Indeed, Taxpayers accept that statutory terms which 

embody such an offsetting concept -- but which do not employ the actual word “credit” -- 

nevertheless “explicitly refer[ ] to credits.” Reply Brief for Appellees at 25. Thus, while 

they do not discuss Subsections 19-1703(5) or (8) in their submissions, Taxpayers’ 

contentions are entirely consistent with the conclusion that such provisions expressly 

contemplate a form of a credit. 

3

 Notably, it is a cardinal principle of statutory construction that statutes are to be read 

as a whole. See, e.g., Bd. of Revision of Taxes, City of Phila. v. City of Phila., 607 Pa. 

104, 124-25, 4 A.3d 610, 622 (2010). 

4

 The majority suggests that the City is able to budget prospectively for liability based on 

credits. See Majority Opinion, slip op. at 16. From my point of view, the ability to do so 

(for a time period depending on factors outside the City’s control such as the extent of a 

taxpayer’s present liabilities subject to offsetting) is far less significant than the City’s 

apparently perpetual exposure to credits long after tax liabilities are believed to have 

been settled. Accord City of Phila. v. City of Phila. Tax Rev. Bd., Nos. 97-98 C.D. 2013, 

slip op., 2013 WL 6095552, at *7 & n.2 (Pellegrini, J., dissenting). 
[J-4A-D-2015] [M.O. – Eakin, J.] - 5 

Next, I turn to Taxpayers’ arguments grounded upon Section 19-2610 of the 

Philadelphia Code, PHILA. CODE §19-2610 (requiring the Department to promulgate 

regulations to provide for credits to be granted on overpayments of estimated taxes), 

and Section 202(A) of the Department’s regulations, PHILA. BUS. PRIV. TAX REG. §202(A) 

(implementing Section 19-2610 by prescribing that overpayments of a current tax year 

are to be applied first to the payment of an estimated tax for the tax year that follows or 

to other taxes due, then, in the absence of a refund, to future tax years). Upon review, I 

differ with Taxpayers’ contention that these provisions were intended to encompass 

allowance for credit claims beyond the time period permitted for seeking refunds. In this 

regard, I do not view the filing of an amended tax return as harkening directly back to 

estimated tax payments, because there is a material, intervening event, namely, the 

filing of an initial return. After the filing of the initial return -- and its reconciliation of 

estimated tax payments with tax liabilities (particularly where this process encompasses 

provision of refunds or credits to taxpayers) -- associated estimated tax payments can 

no longer be viewed in isolation, but rather, must be considered in light of the 

reconciliation which has occurred.5

 

5

 This is amply demonstrated via reference to Appellee QCC Insurance Company’s 

amended 2003 Business Privilege Tax return. Although this return, filed in 2009, 

reflects the same estimated tax payments figure that QCC had indicated on the initial 

return ($4,558,765), compare R.R. 26a with R.R. 79a, in the amended return, the 

company needed to account for a refund of $401,979 tendered by the City in November 

2004 based on overpayments asserted in the initial return. This reconciliation, then -- 

and not the estimated tax payments figure -- measured against QCC’s Business 

Privilege Tax liability, served as the basis for QCC’s refund claim advanced in its 2009 

amended return for the 2003 tax year. 

Notably, the 2003 Business Privilege Tax form simply does not contemplate amended 

filings which require these sorts of reconciliations. Thus, QCC noted them by way of an 

annotation. See R.R. 79a. Consistent with my rationale above, I regard the form, 

(Rcontinued) 
[J-4A-D-2015] [M.O. – Eakin, J.] - 6 

For this reason, when City Council required the Department to promulgate 

regulations to provide for credits to be granted for overpayments of “estimated tax 

payments,” PHILA. CODE §19-2610, I find it unlikely that Council contemplated that such 

prescription would circumvent Section 19-1703(1)(d)’s three-year limitation and herald 

credit claims for overpayments submitted for the first time many years after the relevant 

tax year. Rather, while acknowledging that there is ambiguity, but applying a 

construction favorable to the government, I conclude that City Council intended for the 

reconciliation of estimated tax payments to be accomplished in tandem with the timely 

filing of an initial return. Thus, consistent with the City’s position, I believe that the only 

appropriate procedure for a timely recoupment request is to seek a refund under 

Section 19-1703.6

I recognize the disparity arising out of the requirement for taxpayers to pay 

additional business privilege taxes, when implicated by a federal audit completed after 

the Section 19-1703(1)(d) limitations period has expired, and the enforcement of 

Section 19-1703(1)(d) to foreclose taxpayer refund claims submitted after such time. 

 

(continuedR) 

Section 19-2610, and Section 202(A) as being analogous, in the sense that their 

content is geared primarily to the treatment of initial -- and not later amended -- returns. 

6

 Certainly, City Council could have been more specific, as well as provided 

particularized procedures for the submission of amended returns. The absence of such 

procedures, however, does not require that provisions which facially appear to relate to 

an initial reconciliation of estimated tax payments as such, accomplished by way of an 

initial return, should be expanded to encompass amended returns. Indeed, the 

Department’s implementing regulation, PHILA. BUS. PRIV. TAX REG. §202(A), also is most 

naturally read to focus on the allowance of credits pertaining to the reconciliation 

occurring upon the filing of an initial return. See id. (“Any overpayment of the current 

year tax shall be applied first to the payment of an estimated tax for the tax year that 

follows or to other taxes due. A remaining balance, if any, shall be applied to future 

[tax] years unless the taxpayer requests a refund of the amount.”). 
[J-4A-D-2015] [M.O. – Eakin, J.] - 7 

However, there simply is no salient requirement for equilibrium as between constraints 

upon the government (which represents the interests of the citizenry at large) and those 

affecting individual taxpayers. 

Based upon the above, I would hold that, because Taxpayers failed to file their 

amended returns within the three-year period provided under Section 19-1703(1)(d), the 

availability of refunds and/or credits for their past overpayments was foreclosed.7 

Accordingly, I would reverse the order of the Commonwealth Court relative to the City’s 

appeal (concerning tax credits) and affirm the order as to Taxpayers’ cross-appeal 

(regarding refunds). 

Mr. Justice Baer joins this concurring and dissenting opinion. 

 

7

 Viewed from the perspective of the Independence Blue Cross family of companies, the 

deductions to federal income tax liabilities overlooked by Taxpayers (i.e., the 

subsidiaries) apparently mirrored an understatement of net income by Independence 

Blue Cross (the parent). This appeal, however, does not concern whether 

Independence Blue Cross might be entitled to an offset for payments made by its 

subsidiaries relative to any additional local business privilege tax liabilities which 

Independence Blue Cross may have incurred on account of the federal audit. Taking a 

relaxed view of corporate formalities, at least, it would seem that the decisions in Bull v. 

United States, 295 U.S. 247, 55 S. Ct. 695 (1935), and McNeil-PPC, Inc. v. 

Commonwealth, 575 Pa. 50, 834 A.2d 515 (2003), cited by Taxpayers, might be more 

relevant to this issue.